(Bloomberg) — The yen weakened beyond 155 per dollar for the first time since July, raising the risk that Japan will enter the currency market to try to slow the depreciation.
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The Japanese currency slid as much as 0.3% to 155.04 against the dollar, extending its losses after Donald Trump’s re-election as US president. The surge in Treasury yields is weighing on the yen, with the two-year yield reaching its highest level since July.
The drop has taken the yen near levels when Japanese authorities last intervened to prop up its currency, with the nation’s top foreign exchange official warning about the one-sided, sudden moves. The minimum forecast of the yen that may trigger intervention was 150 against the dollar, with the median at 160, according to a survey of 53 economists carried out by Bloomberg last month.
Trump’s expansionary and inflationary economic policy may make the Federal Reserve less willing to lower interest rates. That could further weaken the yen as the market questions the pace for further narrowing of the interest-rate gap between Japan and the US.
The government has kept traders on their toes about when they will next intervene in the currency. This year, Japan spent a record ¥9.8 trillion ($63 billion) during interventions in late April and early May, and another ¥5.5 trillion in early July after the yen reached its weakest since 1986.
Persistent weakness in the yen may also prompt the Bank of Japan to consider hiking interest rates sooner than expected. BOJ Governor Kazuo Ueda acknowledged at a news conference in October that foreign-exchange rates have been impacting price trends in Japan.
–With assistance from Masaki Kondo.
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